The spatial effect of fiscal decentralisation on regional disparities: the case from Indonesia

Adiwan F. Aritenang(1*)

(*) Corresponding Author


This study investigates the effect of decentralization on regional economic convergence between 1994 and 2004. Using spatial analysis, this research explains the presence of spatial dependence, which it is misleading to ignore it on the common linear regression. The paper argues that there is a strong evidence of spatial autocorrelation among.Indonesia districts and regional convergence rate is higher in the decentralization period. Furthermore, the spatial error model suggested that, despite Jakarta’s major economic and political role, a random shock is insignificant if it introduced to the capital city.


Indonesia;Decentralization;Regional Convergence;Spatial Random Shocks

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Accredited Journal, Based on Decree of the Minister of Research, Technology and Higher Education, Republic of Indonesia Number 225/E/KPT/2022, Vol 54 No 1 the Year 2022 - Vol 58 No 2 the Year 2026 (accreditation certificate download)

ISSN 2354-9114 (online), ISSN 0024-9521 (print)